September 2023 Inflation Notes by Jordan Lee

Hi my friends!

Inflation numbers are out today. And I finally have some GOOD NEWS to share :) 

September CPI is down at 3.80% from August CPI at 4%

This is great news ahead of BoC’s interest rate announcement next week (October 25) as inflation is one of the major factors that dictates what BoC will do. Looks promising for no increase next week from where we currently stand (but no guarantees or promises of course)

Some high-level points:

• Inflation rate is lower than economists were anticipating
• The main upward pressures on annual inflation: mortgage interest costs, rent, food purchased from restaurants, gasoline and electricity
• Price growth for groceries continue to slow, but remains elevated (year-over-year, we are up 5.8%, but that’s down from more than 11% comparing to the same time last year)
• Other lower priced items: telephone services, naturals, air transportation, childcare, housekeeping services, furniture
• Cost of living declined by -.1% (this first time that has happened since November 2022)
• Gasoline fell month-over-month, but we are still up year-over-year which pushes up the annual rate
• Economists estimate it can take one to two years for the full effect of a rate hike to work its way through the economy
• "The lagged impact of interest rate hikes to-date will continue to exert downward pressure on consumer spending as debt payments rise as a share of household incomes, making it more challenging for businesses to raise prices as fast and as frequent," wrote RBC economist Claire Fan in a client note.

GDP shows economy is weakening. Inflation is back on track in a downward trend (let’s see if that continues in the coming months). These are all positive signs to hope that BoC will not be increasing in their interest rate announcement next week October 25, 2023.

Please always free to reach out if there’s anything you want to chat out or have questions about

Best,

JORDAN LEE, Mortgage Agent Level 2